(From Bob: I was excited when Jay sent me this article about reducing credit card interest rates, because there are way too many Christians who are giving all their money to credit card companies instead of into the Kingdom! I wrote a similar article a while back as well – how to negotiate with credit card companies.)
Credit Card Debt can Destroy Your Wealth Potential
Have you ever heard the saying “I’m so poor, I can’t even pay attention”? It is so true with credit cards. Most people do not pay attention to the fine print. The biggest financial mistakes that I see on a day-to-day basis mainly deal with credit card issues. It is not so much the balance that is the problem, it is the interest. This is the biggest wealth-killer. If you have even a $10,000 balance at 19.99 percent, this is almost $2,000 a year in interest. That is $2,000 that could have been donated or invested. This adds up over time, especially when you are making only the minimum required payments.
You will make very little progress if you are just sending that minimum payment each month. This is where the credit card companies make most of their profit. If you owe $10,000 and make the minimum payments, you will often pay two to three or more times the principal amount in interest. That’s right, over the life of that debt, you’ll pay $10,000 or $20,000 or more to service that debt. So a $10,000 purchase may in reality end up costing you $20,000 or $30,000. Credit card companies make money by killing you with late fees, high interest payments, and confusing small print. Don’t be a victim of their game; get out of debt. You can’t achieve true wealth carrying credit card debt.
Reduce the interest rates on those credit cards!
Get the Credit Card monkey off your back
In order to make headway in paying off your credit card debt, you need an aggressive course of action. This requires lowering your interest payments, paying off the smallest balances first, and paying more than the required monthly payments. In order to get the monkey off your back, you have to first be prepared to fight back. In this war for your wealth, pacifism leads to poverty.
You can lower your credit card interest by following a simple method:
Step 1: Find out your current interest rates on your credit cards.
Step 2: Shop around and find what competing cards are charging for interest.
Step 3: Call your credit card companies and ask to speak to a supervisor or manager. Use competitor rates to negotiate your rate down. Keep escalating your request up to the next manager if you do not get the answer you are looking for from the first manager you talk to. Be persistent. Don’t back down.
Step 4: While you are at it, negotiate to have your late fees reversed. This is also negotiable. Be prepared to fight back.
Step 5: Set up your future payments to that company to be made automatically. Either use a bill-payment company or have your monthly payments scheduled to automatically hit before their respective due dates.
Step 6: Continue making the largest monthly payment you can make—above the minimum payment.
The value of reducing your interest rates
Jane came to see me a few years ago. She didn’t think she could ever get out of debt. She and I sat down and figured out that at her current pace, it would take her twenty-eight and a half years to pay off her debt. Her interest rates were between 19 percent and 27 percent. She followed the action plan listed above and negotiated her rates down to 7–12 percent. She paid off the smallest balances first and kept allocating money toward debt repayment.
Within three years, Jane had paid off all her balances. She saved more than twenty-five years of payments and nearly $100,000 in interest charges. She is now able to take the money she was paying the credit card companies and give more to her church and save more for her future. Jane got the credit card monkey off her back.
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I have been fortunate to pay off my CC in full and have not had to worry about this issue. But any time you can lower your rates you should. Is this something you would recommend even to ask if you don’t have that issue right now?
Of course the best way to avoid interest rate issues is to pay it off each month. Don’t buy more than you can afford.
I owe over 35,000 total on 4 credit cards. Most of the money came from helping children who had lost jobs due to the economy and needed to pay insurances, mortgages, medical bills. They are still all struggling to earn enough but are also learning to do without and face their creditors rather than ask for more help from me. About 10,000 was put on over 4 years by me for my own needs because I began earning less and less each year in my industry. And about 5,000 was put on for my wants.
I am considering bankruptcy because I have been unable to find work since January. I must work nights in order to care for a grandchild one more year. Our entire area is suffering. Most jobs available require college degrees, very flexible scheduling, or being a strong, etc. male.
I have nothing left to sell and only own a 7 year old car. And I live with children who struggle now when once they prospered.
Believe it or not we are all very happy and making the most of opportunities to help each other.
My interest rates are between 14.99 and 5.99 on what I owe for the most part with about half being at 9.99. So asking them to lower their rates seems like begging for trouble.
I am almost 56. My job opportunities without retraining look less and less attainable.
I would like to declare bankruptcy of some kind. Ask children to help me afford retraining while living with one of them (they will), and then, in the future, pay off my debt. Is this possible? Is there a form of bankruptcy that admits I am unable to pay but will try to in the future?
Thank you.
Ya i agree that you should buy what you can afford, according to me we keep the credit cards as an added facility, but sometimes it cost us too much for making payments of the credit card bills.
You’ve got to watch impulsive buying and really start paying cash for things. If you use your credit card make it a habit to pay it off at the end of the month or don’t make your purchase.